TARC Shares Plunge 10% as SEBI Appoints Forensic Auditor

Shares of TARC Ltd. dropped 10% on Tuesday, hitting the lower circuit limit, after the Securities and Exchange Board of India (SEBI) appointed a forensic auditor to review the company’s financial statements for fiscal years 2020-21 to 2022-23. The move follows concerns about the manner in which TARC disclosed its financial information and business transactions.

SEBI’s Decision & Concerns

According to SEBI’s letter dated December 16, the decision to appoint a forensic auditor arises from concerns that the company’s disclosures may be detrimental to investor interests and the integrity of the securities markets. SEBI’s scrutiny will focus on ensuring compliance and transparency in TARC’s financial reporting.

TARC’s Response

In an exchange filing, TARC acknowledged SEBI’s action and assured full cooperation with the audit. The company emphasised that the investigation would not affect its financial, operational, or strategic objectives. TARC stated, “We believe this audit will eventually enhance shareholder trust as we continue to prioritise transparency, compliance, and accountability.” 

The company also committed to keeping the exchanges updated on any further developments related to the matter.

Market Reaction

The announcement weighed on investor sentiment, causing TARC’s stock to hit the lower circuit at ₹187.92 on the NSE and ₹189.55 on the BSE during Tuesday’s trading. The stock is down 10%, in contrast to a 1.20% decline in the benchmark Nifty 50 as of 1:41 PM.

Despite the plunge, TARC has shown gains over the past year. The stock has risen 39.41% in the last 12 months and 38.48% year-to-date, while gaining 328% over the past two years. 

Recent Fundraising Efforts

Prior to SEBI’s announcement, on December 13, TARC disclosed that its subsidiaries, including Fabulous Builders Ltd., Grand Buildtech Ltd., TARC Green Retreat Ltd., and step-down subsidiary Moon Shine Entertainment Ltd., would raise ₹340 crore through the issuance of non-convertible debentures (NCDs).

SEBI’s decision to initiate a forensic audit has triggered a sharp decline in TARC’s stock price, reflecting investor concerns. The company maintains that the audit will not impact its growth plans and believes it will reinforce shareholder trust through improved transparency and compliance. Further updates on the audit’s progress will be awaited by stakeholders.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.